Lululemon lawsuit over sheer yoga pants gets lead plaintiff
* Louisiana sheriffs' fund to lead lawsuit over disclosures
* Canadian company faulted over quality control, discounts
By Jonathan Stempel
Oct 1 (Reuters) - A Louisiana pension fund will lead U.S. litigation accusing Lululemon Athletica Inc of fraudulently hiding defects that caused yoga pants to become nearly sheer, and concealing talks that led to the surprise departure of its chief executive.
U.S. District Judge Katherine Forrest in Manhattan on Tuesday said the Louisiana Sheriffs' Pension & Relief Fund, which owned about $1.3 million of Lululemon stock, will handle the litigation on behalf of shareholders.
Lululemon has long been known for making athletic clothing that could withstand many years of wear and washes.
But trouble surfaced in March when the Vancouver, British Columbia-based company recalled its top-selling item, women's black yoga pants containing its proprietary Luon fabric, after determining the pants were too sheer.
Less than three months later, Lululemon on June 10 announced the departure of Chief Executive Christine Day. Its shares fell 17.5 percent the next day, wiping out $1.62 billion of market value, Reuters data and a regulatory filing show.
Two lawsuits filed in Manhattan blamed the defective pants on cost-cutting, and accused Lululemon, Day and Chairman Dennis "Chip" Wilson of hiding the defects, using deep discounting to boost market share, and concealing plans to replace Day. Continued...